SMEs employing the masses

The Commonwealth Business Forum attracts some of the world’s largest companies but the forum this year also has a strong focus on small business, which employs the vast majority of the world’s population.

The official communiqué to be published at the conclusion of the forum is expected to recognise the importance of small and medium enterprises, and provide details of initiatives that will assist small businesses to grow.

The Commonwealth Business Council has indicated the most likely policy to be implemented first is the designation of a “champion", or representative, for each region, which will advise on policy priorities.

The multiple sessions on SMEs (small-to-medium enterprises) and entrepreneurship held so far at the forum suggest there is a real desire for greater collaboration between companies to establish trade links and share experience.

Air Asia X chairman and former Malaysian minister for trade and industry Tan Sri Rafidah Aziz wants to establish “EBiz Commonwealth", a website giving export-ready SMEs a forum to spruce their wares and establish trade networks.

Ms Rafidah suggested such a forum could be managed and funded through a public/private collaboration, large companies receiving tax breaks for contributing.

“I also think at the Commonwealth level, we should have an action plan for SMEs. This would entail a comprehensive national profile of SMEs for each country and policy templates which could be set up, which each government could take and adjust according to domestic needs," she said.

SMEs are the backbone of development in Africa, the advent of micro-credit allowing anyone to try their hand at running a business, yet even in the most developed nations of the Commonwealth, SMEs provide employment for the masses.

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The idea of an online forum emerged from a session on entrepreneurship, chaired by MLS Chase chief executive Manoj Ladwa. It would act like an “innovation hub", he said, “where universities and academic institutions throughout the Commonwealth are connected, virtually initially . . . where new technology can be incubated and be developed for the benefit of all countries around the Commonwealth, assuring they are accessible, affordable and available."

In Singapore, consistently ranked as one of the world’s most innovative countries, the government proposes challenges to solve and companies of all sizes are welcome to propose solutions.

Singaporean Member of Parliament Penny Low said companies outside Singapore were welcome to contribute and form partnerships with the government and local businesses.

One of the most significant hurdles for SMEs in many nations is access to capital.

Seychelles Foreign Minister Jean Paul Adam said international banks like Barclays were in his country for the other international companies, and were often reluctant to deal with local SMEs.

But Nigerian Bank of Industry chief executive Evelyn Oputu said the post-global financial crisis world was not the right time to ask fragile banks to assume more risk, and said government guarantees for SME loans would provide a greater sense of security.

Commonwealth Secretary General Karmalesh Sharma said the Commonwealth was working to encourage banks to lend to young entrepreneurs, who frequently did not have access to collateral.

“If we can trust them with the future, then why not with funds," he said.

Ms Rafidah said Malaysia had programs to move young small business owners from micro credit through to the country’s dedicated SME Bank, which was established in 2005.

“We have specially tailored programs for youth entrepreneurs and it has been going for many years, and we’ve now pushed up the limits on financing," she said.

“They go from micro credit to the SME proper, and once they are on stable foundation, they go to the SME Bank."

Malaysia also aims to run training programs in each district to prevent a brain drain from rural areas to the major cities.

The forum also provided some ideas to inspire the next generation of entrepreneurs, particularly in developing countries.

The idea of a database of success stories to inspire young entrepreneurs was floated, potentially featuring people like forum attendee and African business tycoon Reginald Mengi.

Mr Mengi was born in Tanzania in a mud hut and made his first few thousands turning charcoal into shoe polish and used paper into toilet paper.

He is now the chairman of one of East Africa’s largest and most diversified companies, IPP Resources.

Mr Ladwa said there were many examples of extraordinary success stories.

“These stories need to be told, so the younger generation can see role models in their own countries. It doesn’t have to be just the Bill Gates and Richard Bransons of the world," he said.

Many in attendance said they would like to see children educated about business models to teach them that they could start their own enterprises, rather than automatically planning to work for someone else.